Summary
Description
Overview for businesses in Ireland
When you sell services to an EU customer who is not VAT registered (an EU consumer), VAT is charged at either:
- The Irish rate (home VAT) if you're selling standalone services
- At the rate of the country where your customer lives (destination VAT) if you're selling digital services
On 1 July 2021, the EU introduced an optional One Stop Shop VAT scheme for the sale of digital services which attract destination VAT.
Instead of having to register and pay VAT in each country you sell to, you can choose to report and pay EU VAT on digital services through a single return using the One Stop Shop.
If you use the One Stop Shop you will need to charge destination VAT at point of sale.
For a full list of services that attract destination VAT visit the European Commission website (opens in new tab).
Resolution
Create a sales invoice with destination VAT
Before you start
If you need to charge destination VAT check that you have added:
- Destination VAT in financial settings
- OSS Services on each relevant service item
- An EU customer that is not VAT registered
- Go to Sales, Sales Invoices, and select New Invoice.
- In the Customer field, select your EU customer from the list, or type the customer name. If the customer is not a saved contact, select Add a customer to create a record for them.
- On the first invoice line, select a service from the list, or start typing its name to find it. If the service is not a saved item, select Create item and apply OSS Services to create a record for it.
- In EU Goods/Services select Services (standalone) to apply destination VAT rules.
Repeat steps 3 and 4 on a new line for as many items as you need to add to your invoice.
TIP: An invoice cannot contain a mix of services with home and destination VAT. If you need to invoice a service that has home VAT, you must create another invoice. - Select Save.
The VAT Return
Sales of services to EU consumers are reported in box ES1 - Value of services sent to other EU countries.
The VAT element on destination VAT sales is excluded from your VAT Return. You need to report this on your OSS VAT Return through the OSS system.
Destination VAT report
The OSS Sales Analysis in Reporting shows all sales where destination VAT has been charged. This will help you to complete your OSS VAT Return through the OSS system.
Create a sales invoice with home VAT
- Go to Sales, Sales Invoices, and select New Invoice.
- In the Customer field, select your EU customer from the list, or type the customer’s name. If the customer is not a saved contact, select Add a customer to create a record for them.
- On the first invoice line, select a service from the list, or start typing its name to find it. If the service is not a saved item, enter a description for the item or select Create item to create a record for it.
- In EU Goods/Services select Services (standalone) for each invoice line. Select the VAT rate that you would apply if the purchase was made in Ireland.
Repeat on a new line for as many items as you need to add to your invoice TIP: An invoice cannot contain a mix of services with home and destination VAT. If you need to invoice a service that has destination VAT, you must create another invoice. - Select Save.
The VAT Return
Sales of services to EU consumers are reported in box T1 - VAT on Sales.
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